Presentation of survey (appendix 1)
In our survey we have asked the Danish people about energy production in general, and more importantly about the Danes’ attitudes towards Ørsted. Therefore, Ørsted will be assessed based on the answers provided by the respondents. When asked what the respondents associates with energy production, 48 percent of answers contained the word
“wind”, and 39 percent of the respondents answered “windmills” specifically, which is high compared to the responses involving words relating to traditional fossil fuels, which only 17 percent associated with energy production. This correlates well with the fact that 89
percent answered “green energy” when asked what their opinion is on how energy should be produced. After the two questions about energy production in general, we asked if the respondents know the company called Ørsted, here 100 percent answered yes. When asked about what the respondents associate with the name Ørsted, 20 percent of the answered contained the word “energy”. The second most answered word (19 percent) was H. C. Ørsted, which is the Danish scientist that Ørsted is named after. Additionally, 17 percent answered that they associate the name Ørsted with DONG. In regard to Ørsted’s logo, 31 percent of the respondents associates it with an on-off button. 12 percent
answered that it reminded them of something to do with the word “wind”, which was the second most answered word. The respondents then were asked what the color used in the logo reminded them of, to which the majority, being 24 percent, answered that it reminds them of water, additionally 15 percent answered that it specifically reminded them of the ocean. Another interesting result is that 7 percent answered that it reminded them of Mærsk, another Danish company. When asked about Ørsted’s slogan “Love your home”, 17 percent thought that it was misleading for Ørsted to use. 14 percent associated the slogan with interior designing or furniture companies such as IKEA. If the answers, regarding the slogan, is looked at in terms of whether or not they were desirable or beneficial for Ørsted, we see that 69 percent of the answers would not be associations Ørsted would want their slogan to cause. When asked which of the following words best described Ørsted, the five most answered words was all in favor of Ørsted, and with the highest response rate of 78 percent, green energy was the word most associated with Ørsted.
The next two questions were about whether Ørsted has a social responsibility as an energy producer and organization, and if it lives up to its social responsibility. Here 100 percent of the responds believed that Ørsted did have a social responsibility. Then when asked if Ørsted lives up to its social responsibility, only 18 percent thought so and 18 percent thought it did not, while the majority answered, “Don’t know”. However, this should be seen in the light of only 11 respondents answered these two questions, meaning that it is difficult to conclude what the Danish people beliefs are on the matter. Ørsted’s vision were well received by the respondents, as only 7 percent were negative towards the vision. Most respondents thought it sounded good, some did have their doubts of whether or not it will succeed in carrying out its vision, nonetheless they thought it was a good vision. Finally, the respondents were asked what their opinion of Ørsted’ mission is, here 86 percent were positive towards Ørsted’s mission of “Phasing out the use of coal and only producing 100% green energy by 2023.” (Ørsted, n.d.).
PEST Analysis for DONG Energy 2014
As mentioned in the theory section, the PEST analysis can be made for the general environment and for the competitive environment. In this PEST analysis we will only look at the general environment and, as mentioned in our delimitation, not be focusing on the competitive aspect. Furthermore, we will only address the elements in the respective factors that we deem important, regarding the answering of the thesis statement, as the PEST analysis would be too immense, if every potential element of each factor was to be covered. We will use the PEST analysis to find out which elements under the respective factors that have played a role in regard to DONG Energy’s decision to rebrand itself.
It has not been possible to find out the exact date DONG Energy saw the need for a rebranding, as this information is not publicly accessible. However, October the 2nd, 2017, the CEO, Henrik Poulsen, announced that DONG Energy would be rebranded as Ørsted (Eriksen, 2017) and according to Dansk Markedsføring, DONG had two years before hired the branding and design bureau Kontrapunkt to help them with the rebranding (Larsen, 2017a). We have therefore chosen to base our PEST analysis on the year of 2014, as it is the year leading up to DONG hiring Kontrapunkt, and most likely when it took the decision to rebrand. The fact that we are making a PEST analysis for 2014, means that we are looking back in time, which could create a confirmation bias, as we already have a
preunderstanding of the situation. It can be a disadvantage, in terms of us missing factors that might not be directly related to the rebranding but still could have had an impact.
Political factors
One of the political elements that had a lot of influence on DONG Energy’s image during 2014, started in September 2013, where Goldman Sachs that had a poor reputation of contributing to the financial crisis by exploitative business practices, and Danish pension funds ATP and PFA offered to buy 26 percent of DONG Energy shares for DKK 31.5 billion (Ritzau, 2014b). The offer came two years after the DONG Energy management initiated a search for capital (Ritzau, 2014b). The offer was met with broad political support at first, however, the political support took a small downturn towards the end of 2013 (Ritzau, 2014b). In January 2014, more political parties started to oppose the sale of the DONG Energy shares to Goldman Sachs (Ritzau, 2014b). What further strengthened the skepticism towards the sale, was the way the sales process was carried out. For instance, the Danish finance minister received another offer from four Danish pension funds to buy the DONG Energy shares (K. Ø. Nielsen, 2015), an offer that came as an alternative to Goldman Sachs’, and which would secure the shares staying within Denmark, something many found preferable (K. Ø. Nielsen, 2015). However, the finance minister declined the offer and continued with the sale of the DONG Energy shares to Goldman Sachs and a smaller amount to ATP and PFA. Another example of the less than optimal sales process was that the final agreement was made orally behind closed doors without written proof (Steinitz & Vinter, 2015). The political handling of the DONG Energy sale started a resistance among the Danish people against the selling of the DONG Energy shares, which will be further elaborated under the social factors.
Another political factor that played a huge role for DONG Energy, and continues to do so, is the fact that the company is state-owned, as the government owns just over 50 percent of the company (Finansministeriet, n.d.). This has a large impact on DONG Energy, as the Danish government with its 50 percent has the right to veto and by that the government can influence or block the decisions made by DONG Energy. This could have a huge impact on DONG as it can become an obstacle to DONG Energy if it wishes to make any major decisions and the government vetoes it. As earlier mentioned, the government sold
off 19 percent of DONG’s shares to Goldman Sachs (Ritzau, 2014b). On top of the 19 percent of the shares, Goldman Sachs wanted the right to veto any board decisions.
Goldman Sachs’ wish was granted by the government and Goldman Sachs received the right to veto (Ritzau, 2014b). This political decision could naturally also have an impact on DONG Energy, as Goldman Sachs received the right to veto against any board decisions that they do not agree to.
In 2014, Denmark passed its first climate bill, made in order to benefit the environment and climate (Energi-Forsynings- og Klimaministeriet, 2014). The fact that the bill was passed, shows that there was a huge political focus on the climate and political opinion on how energy should be produced in the future, as well as the use of resources in Denmark at the time. The bill was also intended to work as a motivator for businesses to become greener. Furthermore, a climate council was established, consisting of different
independent experts, to advise the Danish government on how to convert Denmark into a greener society the easiest and cheapest way (Energi-Forsynings- og Klimaministeriet, 2014). The fact that the climate bill was passed, along with the establishing of a climate council, also ranked Denmark as the first place on PA Consulting Group’s "Energy
Investment Map" in terms of green energy (Ritzau, 2014a). This could also be a factor that impacted DONG to rebrand itself as a green organization.
Economic factors
When looking at economic factors as of 2014, Bjørn Lomborg (2014) believes that
renewable energy is simply too expensive. His solution to reducing the price of renewable energy is to invest in research and development that will make the next generations of wind, sun, and biomass cheaper and more efficient (Lomborg, 2014). The fact that renewable energy was more expensive to produce than energy from fossil fuels, could potentially have impacted DONG Energy and its wish to rebrand. The fact that its name refers to fossil fuels, such as oil and natural gas, as in Danish Oil and Natural Gas, gives them the image of producing fossil fuel energy, the cheaper alternative at the time, which after the financial crisis could be considered an advantage. Even after the financial crisis, the government of Denmark still expected a deficit of DKK 22 billion on the government’s financial balance (Whitta-Jacobsen, Svarer, Amundsen, & Dalgaard, 2014). However, due
to a one-time income in the form of pension money, the balance then was expected to reach a surplus of DKK 34 billion for 2014 (Whitta-Jacobsen et al., 2014). Since this shift from deficit to surplus is caused by a one-time income, the government and economists were still skeptical towards the Danish economy, and the government was therefore still not investing as much as it wanted to (Whitta-Jacobsen et al., 2014). This could arguably be a disadvantage for DONG Energy, as it is government-owned and receives some of its capital from the government.
Social factors
As earlier mentioned, the political handling of the DONG Energy sale, and the fact that the shares were being sold to Goldman Sachs, started a resistance in the Danish people against the sale. The resistance of the sale grew so large that the people who were against the sale of DONG Energy shares to Goldman Sachs, started demonstrations as well as a petition against the sale (K. Ø. Nielsen, 2015). With around 200,000 signatures collected, it was the largest signature collection in Denmark's history (Christensen, 2014).
Furthermore, there was an opinion poll showing that 80 percent of the Danish people were against the sale of DONG, 11 percent answered: “don’t know” and only 9 percent
supported the sale (Aagaard, Arnfred, Sørensen, & Bæksgaard, 2014). Clearly showing that there were almost no people supporting the sale of the DONG Energy shares. This factor could potentially have played a role for DONG, as the people might look at DONG in a negative way due to sale.
As previously stated, Denmark passed its first climate bill in 2014, which exemplifies the current trend in the Danish population in 2014. According to an opinion poll, made by Danmarkspanelet for DR Nyhederne (Danish Radio News), 75 percent of those asked answered that they to some degree worry about the climate changes and global warming (Nissen, 2014). However, according to a research carried out by the consumer council Tænk, only one out of three people thinks that it is important to buy products that are environmentally friendly (Birk, 2014). Indicating that even though most of the Danish people worry about the environment, not all of them are willing to change their consumer behavior for the environment. According to Torben Chrintz (2014), scientific adviser Concito, there are reasons to be worried as the UN's Intergovernmental Panel on Climate
Change (IPCC), the world's leading international panel for climate assessments, states that climate change poses a threat to both people and nature in a report from May 2014 (Nissen, 2014). Chrintz also states that the broad support from the Danish people is important, since it creates political awareness and political action on the matter (Nissen, 2014) and a more sustainable society with lower emissions of greenhouse gases, not only in Denmark but around the world (Københavns Universitet, 2014).
Technological factors
The cost of producing green energy by wind turbines is very high, and so is the technology that follows (Bøss, 2014). According to Niels Duedahl, the CEO of SE, green energy is simply bad business, as it is much more expensive compared to the cost of producing fossil fuel energy (Arzrouni, 2014). This is of course a factor that plays a role for DONG Energy, as it mainly produces energy made from fossil fuels as of 2014, with the
distribution being 56 percent fossil fuels and 44 percent green energy (Ørsted, n.d.-q).
However, the technology is improving, and a new innovative direct drive technology created by Siemens is a milestone in the journey towards Increasing efficiency and reducing the price of offshore wind energy (Riis, 2014). Furthermore, Jakob Askou Bøss, the Senior Vice President in DONG Energy, along with other parts of the industry, admits that the price of offshore wind turbines has to decrease (Bøss, 2014). Yet, he strongly believes that the industry will reach its goal of reducing the costs by 35-40 percent by 2020 (Bøss, 2014), making it an important factor for DONG Energy.
Conclusion on PEST analysis for 2014
This PEST analysis shows that there are different factors in DONG Energy’s surrounding environment, which all could have played a role in DONG Energy taking the decision to rebrand itself as Ørsted. Mainly two of the factors seem to be prevailing, the political and social factors. Nonetheless, all factors appear to have relevant elements that all potentially could lead to an answer to what caused DONG Energy to rebrand itself.
PEST Analysis for Ørsted 2019
We are making this PEST analysis to update the points found from the previous PEST, so that we can make a SWOT analysis based on Ørsted as of 2019, in order to use the SWOT analysis in our assessment of Ørsted’s rebranding results.
Political factors
The fact that Ørsted is still government-owned has a huge influence on the company. An example of this can be seen in Ørsted’s attempt to sell off one of its subsidiary companies Radius, an energy distribution company. This sale was blocked politically, after the sale lost its political support (Vilsbøll, 2019). This impacted Ørsted, as it wished to become more streamlined and to raise capital for intensifying its focus on investments in producing green and renewable energy (Chor & Juel, 2019).
Since the first climate bill was passed in 2014, there has been an increased focus on the climate. However, the focus on the climate has intensified and the government is now aiming for a new and much more ambitious climate bill (Energi- Forsynings- og
Klimaministeriet, 2019). The Danish Energy, Supply and Climate Minister, Lars Christian Lilleholt, has high ambitions with the new climate bill, as he wants Denmark to become 100 percent climate neutral in the year of 2050 (Energi- Forsynings- og Klimaministeriet, 2019). This could be a factor that would likely impact Ørsted positively, as a producer of green and sustainable energy.
Furthermore, according to the rapport, put out by Dansk Energi (2019), called VE (Renewable Energy) Outlook 2019, there is a challenge in regard to the transition from fossil fueled energy production to a green and renewable production. The challenge is that the government and its planning process is simply too slow and can act as a hindrance when it comes to assessing and approving new projects (Dansk Energi, 2019). Meaning that the transition from fossil fuels to green energy could be prolonged and take longer than necessary.
Economic factors
The price of green energy has experienced a significant decrease since 2014 (Dansk
cheapest sources of new electricity production, making green energy a profitable business (Dansk Energi, 2019). This factor could have a huge impact on Ørsted, as it is investing a lot in wind generated energy. Furthermore, the Danish economy is in a calm and balanced upsurge that seems to continue (Nationalbank, 2019). This boom in the Danish economy could become beneficial for Ørsted, as investments would be more likely in such an environment.
Social factors
As mentioned earlier, the Danish people have had a lot of focus on the climate. This focus has intensified since 2014 and is deemed to become one of the central themes in the upcoming election (Danmarks Naturfredningsforening, 2019). According to professor of political science Kasper Møller Hansen, who researches voter behavior, there has never been such a strong focus on the climate and environment (Danmarks
Naturfredningsforening, 2019). This corelates well with the much more striving ambitions put out by, the Danish Energy, Supply and Climate Minister, as earlier mentioned. This immense societal focus on the climate is a factor that most certainly will affect Ørsted in the future, and almost guaranteed positively in the immediate future.
According to the VE Outlook (2019), there is broad support for expanding green energy production in Denmark, with 82 percent of the Danish people in favor of it (Dansk Energi, 2019). However, expansion requires physical space to erect wind turbines, and finding these areas could potentially become a problem, as 32 percent of the Danish people believes that citizens living near the coasts of Denmark, should have the right to oppose the construction of offshore wind turbines (Dansk Energi, 2019). This is somewhat contradictory to the fact that 82 percent of the people wish for more green energy, yet some still wants the possibility to oppose against the establishments of new offshore wind turbines.
Technological factors
As already touched upon under the economic factors, it is now cheaper to produce green renewable energy generated from the wind and the sun, than it is to make energy from fossil fuels (Dansk Energi, 2019). This has been caused by a significant technological development and industrialization throughout the past few years, according to the VE
Outlook (Dansk Energi, 2019). However, there is still room for improvement as right now the technology for storing large amounts of power is still not present(Dansk Energi, 2019).
Therefore, there must be a focus on developing and distributing new power storage technology, as this is a necessity if Denmark wants to transition into a country that runs entirely on green energy, according to the VE Outlook (Dansk Energi, 2019). Moreover, new technologies within other forms of energy, such as hydrogen, also holds new opportunities for Ørsted.
Conclusion on PEST
As seen above, there are still a lot of factors surrounding Ørsted, which could have an influence on the company and its daily operations. Most of these factors will be assessed later on in the SWOT analysis.
SWOT Analysis 2019
Strengths Weaknesses
- Producing renewable green energy - Industry leader within wind energy - Market leader within green energy
production - Stable financials
- Producing fossil fueled energy - Wind based production
- Government-owned
Opportunities Threats
- Higher political focus on the climate - Very high societal focus on the
climate
- Development of green technologies - Development of other technologies
- Government-owned
- Slow governmental processes - People not willing to live near wind
turbines
- Lack of power storage technologies
As mentioned in the theory section, Strengths and Weaknesses refers to an organization’s internal factors (Henry, 2011). This can make it difficult to make a SWOT assessment of an organization, when you are outside of the organization looking in. Especially the
weaknesses as a company. Which is why ideally, the SWOT is used by organization to find a strategic fit between its resources and the capabilities and needs of the surrounding environment. However, we have done our best to find Ørsted’s weaknesses based on what information that is available for us being outside the company. This also means that the organization’s opportunities and threats are much easier to pinpoint, since they are external factors, meaning part of the surrounding environment, and are therefore
accessible to everyone. In our SWOT analysis of Ørsted, we will start out by assessing its strengths and weaknesses, followed by an assessment of the opportunities and threats that could affect it and its operations. The opportunities and weaknesses will be analyzed based on the PEST analysis of Ørsted’s surrounding environment as of 2019.
Strength
The fact that Ørsted’s energy production is 75 percent green energy (Ørsted, 2018a), is one of Ørsted’s strengths, as it is a renewable form of energy production, and therefore Ørsted is not reliant on fossil fuels in order to produce energy. Additionally, Ørsted is aiming for its energy production to be 99 percent renewable energy in the year of 2030 (Ørsted, 2018a), which will amplify this strength. The next two strengths, which are that they are leaders within the production of wind energy as well as within green energy (Ørsted, 2018a). This gives them a huge strength in terms of being able to compete with other energy companies on energy produced by wind and therefore also on green energy.
Another strength of Ørsted, is that it is government-owned (Finansministeriet, n.d.) and thus, owned by the Danish people by extension. Lastly, Ørsted also has very stable finances (Ørsted, 2018a). This is a strength, as if there should emerge an opportunity to invest in new technologies or if the world economy should face a new finance crisis, then Ørsted have the financial stability to be well prepared for this.
Weaknesses
As mentioned in the strengths, Ørsted’s production is 75 percent green energy as of 2019, meaning it still produces 25 percent of its energy by using fossil fuels (Ørsted, 2018a). this should be seen as a weakness as fossil fuels can run out in the future (Rodriques &
Maach, 2014). However, Ørsted is in the transitioning of converting the last 25 percent of fossil fueled energy production into green energy production, making this weakness a temporary one (Ørsted, n.d.-n). The fact that Ørsted is the industry leader in wind energy
and is basing a lot of its energy production on wind (Ørsted, 2018a), could also be seen as a weakness. The reason for this is that it makes the company reliant on a single power source, which is potentially unreliable, especially with climate changes in mind, this could then mean it would lose its strength of being a market leader within green energy,
compared to other companies that might have invested in other forms of green energy.
The fact that Ørsted is government-owned is also a weakness, since as analyzed it is resulting in less decision-making power for Ørsted in some cases, due to the government having the right to veto any of Ørsted actions (Plechinger, 2019). This makes Ørsted dependent on the Danish government when it comes to major decisions, which can be harmful for Ørsted, as the government might not always know which actions that would benefit Ørsted the most as a company, but instead rather be politically motivated (Plechinger, 2019).
Opportunities
When looking at Ørsted’s surrounding environment it is clear that it provides different opportunities. The first one of them being the high political focus that the climate has been receiving lately. This is seen in the how the government is now aiming for a new and much more ambitious climate bill (Energi- Forsynings- og Klimaministeriet, 2019). Furthermore, this increased political focus on the climate is a reflection of the very intensified societal focus on the climate (Danmarks Naturfredningsforening, 2019). This intensified focus on the climate, both political and societal, naturally possess a huge opportunity for Ørsted, as it is focusing its business around green and renewable energy. Another opportunity for Ørsted, is that the technology used to produce green energy has evolved over the last decade (Dansk Energi, 2019). With new technologies developing, Ørsted could be benefitting from this by learning easier and better ways of producing green energy.
Additionally, the new technologies have caused the price of green energy to become competitive with prices for fossil fueled energy, even out competing it, making it easier for Ørsted to reach its aforementioned vision.
Threats
One of the biggest threats to Ørsted is the fact that it is a government-owned company.
The reason for this is that the government holds the right to veto any actions that it might
tried to sell off its power distributing company, Radius. Here the parliament vetoed the sale, thus preventing it (Plechinger, 2019). Furthermore, according to the VE Outlook, the government’s planning process is simply too slow and can act as a hindrance when it comes to assessing and approving new projects (Dansk Energi, 2019). This poses a threat to Ørsted, as slow processes can delay new projects and potentially leading to the projects being dropped. Another threat to Ørsted and its business is the contradicting fact that the Danish people want more green energy, however some are not willing to have them in their surroundings (Jørgensen, 2018). This would be something that can hinder Ørsted in installing new wind turbines, and by that hurt its future expansion. Finally, the lack of technologies in terms of power storage is also a threat to Ørsted, as there is a need for storing power made for wind turbines, as it is a somewhat unreliable and uncontrollable source (Frøkjær, 2017).
Conclusion on SWOT
This SWOT analysis clearly shows that there are some strong strategic fits between Ørsted strengths and opportunities which it can utilize to its benefit. Ørsted only seems to have one big weakness that can impact them, being the fact that it is government-owned.
However, it should be kept in mind that weaknesses can be difficult to find for a firm one is not a part of, and therefore do not know the inner workings of. There are also a number of threats from the external environment, which Ørsted should pay attention to, in order for it not to tamper with its future business plans.
Rebranding initiation Drivers for rebranding
DONG Energy’ had multiple drivers for greenwashing. Firstly, it divested its oil and gas business (Ørsted, 2017b) making the company structure different, as described as the second driver for rebranding. However, despite this being part of Ørsted’s narrative, the chronology of events could sow doubt about when this driver became relevant, as we have pinpointed the decision to rebrand being made in 2015 (Larsen, 2017a), whereas the decision to divest was made in 2016 (Friis, 2017).
Secondly, there was an understanding that the image had been outdated, since DONG Energy’s old image was associated with being one of the least sustainable energy companies (Kamp, 2018), and the company wanted a new image of being green and